Rising prices drive stockpiling

Amira Hisham, Friday 16 Feb 2024

Many people have resorted to storing goods in the face of continuous price hikes, making a difficult situation more challenging.

Egyptians hedge against future price increases by hoarding staples
Egyptians hedge against future price increases by hoarding staples


With commodity prices hiking by up to 50 per cent since the beginning of the year, Egyptians are changing their consumption patterns, resorting at times to hoarding staples — rice, sugar, flour, and cooking oil — in a bid to save money amid prices that are surging on a near weekly and sometimes daily basis.

Many people believe prices are jumping frantically as a result of an expected floatation of the pound or the appreciation of the dollar against the pound in the black market.

“The holy month of Ramadan is drawing closer,” said Iman, a middle-aged woman standing in line at a supermarket to pay for the large amounts of rice, pasta, and flour she bought. “I am concerned about the rising prices and my inability to make enough food available for my children.” 

Next in line stood Naglaa, in her 60s, with one bag each of rice, cooking oil, and vermicelli. “I can’t afford to buy more. I am aware that the prices are constantly rising, but I can’t buy more than my daily needs. I can’t spend all the money I have and save nothing for emergencies.”

Food merchants are changing their pricing patterns as well.

“My capital is gauged by the goods I have, not the money in my pocket,” Am Gaber, the owner of a grocery store at a local neighbourhood, told Al-Ahram Weekly as he prepared new price tags. Gaber adopts a hedging strategy for pricing commodities amid market confusion. His sentiment is shared by other owners of small grocery stores. 

“If I continue selling goods at the old prices, I won’t make any profit and will face a liquidity crunch when I need to restock,” Gaber said, noting everyone is talking about an impending pound floatation. “Whenever I discuss commodity prices, people mention the dollar’s black market rate,” he added. While trading officially is at around LE31 per dollar, the parallel market rate for the pound has fluctuated in the past few weeks between LE50 and LE70. 

Meanwhile, in large supermarket chains, prices, too, are rising but less randomly. “We raise prices whenever company owners do, irrespective of our current stock levels for a particular commodity,” said the manager of a hypermarket branch. “We strike a balance when we make offers and discounts on goods, in consultation with the manufacturers,” he added.

The increased demand for goods and hoarding practices reflect the fear and anxiety about escalating prices, economist Ali Abdel-Raouf Al-Idrissi told the Weekly. This exerts pressure on the market and affects the whole economy negatively, Al-Idrissi explained.

“It also complicates the correct estimation of the market’s needs, places pressure on the government to meet those needs, and ultimately contributes to a surge in prices,” he noted.

All this is affecting consumer behaviour, said Hoda Zakaria, a professor of political sociology. “With rising prices, people have shifted towards saving, changing their consumption habits, and thinking twice before making any purchases,” she said.

“Families have given up on buying many items and have almost boycotted delivery services. They seek discounts and try to save as much money as they can,” Zakaria stated.

She believes people’s fears can be allayed if the government adopts decisive measures to provide social protection for various social groups.  Zakaria is happy with the decision by President Abdel-Fattah Al-Sisi to increase wages and pensions, a step she believes will afford people some leeway. Al-Sisi announced on 7 February that LE180 billion will be earmarked to increase wages, pensions, and extend tax exemptions to vulnerable groups.

Al-Idrissi said people’s apprehension about rising costs, which has led to a shift in consumption patterns, requires tangible steps on the part of the government. “Sending reassuring messages about stability is inconsistent with facing a sugar crisis,” he said, adding that making sure commodities are available is the only way to calm people down and prevent hoarding.

* A version of this article appears in print in the 15 February, 2024 edition of Al-Ahram Weekly

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